Capacity and Bottlenecks

1 Introduction

This chapter continues the analysis of process capacity begun in Chapter 4. This time we concentrate on the analysis of those activities that are the bottlenecks . This chapter discusses several ways to evaluate bottlenecks and how to design systems that minimize the effect of bottleneck areas. The chapter also presents a powerful tool on the analysis of bottlenecks in service business using operations research. 2 Bottlenecks, Near Bottlenecks, and Non-Bottlenecks

A bottleneck is defined as a resource which has a demand requirement greater than its capacity and which limits the output capacity of the complete system (planned utilization larger than 1 ! of capacity". A bottleneck# as the name implies# is the point of a system where the $space narrows% and the flow is constrained. &f you thin' in term of highways# traffic problems typically occur when the number of lanes is reduced (changing the capacity" and thus becoming a bottleneck. (ther resources can be close to becoming bottlenecks given they are used close to full utilization (or above"# but are not the process bottleneck since there is another activity with a lower capacity. )owever# if the current bottleneck somehow had an increase in capacity# this resource could become the bottleneck. *inally# resources whose capacity is greater than demand by a reasonable margin are called non+bottlenecks . Identifying Bottlenecks The capacity analysis process discussed in Chapter 4 allows us to understand the utilization of resources,activities in a process. -ased on a forecasted or historical product demand# and the times to perform activities (standard times" we can define the utilization of each area and what are possible bottlenecks . )owever# in systems with multiple products# the product mi. can change from month to month# changing the bottleneck resource. This situation is called a shifting bottlenec' problem and is addressed by demand management and the theory of constraints (T(C" techniques discussed in this chapter. /.ample A ba'ery ma'es bagels and *rench bread for sale to local restaurants and coffee shops. The process and standard times for both is in *igure 1. There is only one machine for each activity in the process and the ba'ery is open 04 hours. The standard time for the dough preparation process is based on the production of 1 units.

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*igure 1
3tart 2repare dough 3T 4 1.1min (*-" 3T 4 5 min (-agel" Cool dough Coo' 3T 4 0 ,hr (*-" 3T 4 5 ,hr (-agel" /nd

&f the demand for bagels and *rench -read is 0# per day and 4# per day respectively# the number of hours required in the dough preparation section will add up to 0 and 06.67 for the oven# thus the bottleneck is the oven. &f the demand was the inverse8 0# for *rench bread and 4# bagels# the number of hours required in the dough preparation activity will add up to 01 and 05.5 for the oven# thus the bottleneck is the dough preparation activity. To minimize the effect of the shifting bottlenec' problem# a product mi. should be established based on the profit per product type (ob9ective : to ma.imize profit" and some minimum type quotas. 2roduct mi. problems can be solved mathematically using linear programming# an operations research tool covered in other business courses.

;&<-/=T reprinted by permission of >nited *eature 3yndicate# &nc

5.2

Working with Bottlenecks

=ecognizing what activities and resources are bottlenecks or near bottlenecks is important in order to devise ways to reduce the effect they have on the total output. <et?s loo' at the first scenario in the e.ample above. &f the ba'ery had a scheduling problem and no dough was prepared for two hours# but there was enough dough in the cooling area# nothing will be lost# as the oven will continue production (dough preparation has a slac' of about 1 hours". )owever# if the oven was shut down for 0 hours# production will completely stop for two hours. The critical message here is@ time lost in the bottleneck is lost production time and thus lost output . (n the other hand# time lost on a near bottleneck or on a non-bottleneck may not affect the output. This message is very important as we analyze process capacity and loo' for ways to improve the output capabilities of a process : improving the bottleneck improves the system capacity# improving the non-bottlenecks will have no effect in system capacity. The focus is on either improving the capacity of the bottlenec' activity or in maintaining the bottlenec' activity operating at all times. Ahile there are several methods to increase the capacity of an activity (discussed later in the te.t"# this is sometimes infeasible due to physical# spatial# cost# or other requirements,limitations. *or e.ample# the oven cannot coo' quic'er (bread and bagels will burn"# and the space cannot be e.panded. The only way to add capacity then is to buy another oven# but this may be financially 0 Chapter 1

infeasible due to cash flow or facility space. Thus the capacity is fi.ed. The question is then# how to maintain the oven operating to its fullest capacity. A powerful approach to address bottlenec's (and system improvement" is the Theory of Constraints developed by /liyahu Boldratt (1CD ". The T(C basics are@ 1. &dentify the system constraints. (Eo improvement is possible unless the constraint or wea'est lin' is found." 0. ;ecide how to e.ploit the system constraint. (Fa'e the constraints as effective as possible." 5. 3ubordinate everything else to that decision. (Align every other part of the system to support the constraints even if this reduces the efficiency of non+constraint resources." 4. /levate the system constraints. (&f output is still inadequate# acquire more of this resource so it no longer becomes a constraint." 1. &f# in the previous steps# the constraints have been bro'en# go bac' to step 1# but do not let the inertia become the system constraint. (After this constraint problem is solved# go bac' to the beginning and start over." The T(C proposes a method to maintain the bottlenec' activity operating to capacity called the -uffer# =ope# ;rum system. The buffer refers to having an amount of wor' in process inventory always in front of the bottlenec' resource. The rope refers to the signal sent upstream from the bottlenec' calling for additional production (quantity G" once the buffer has reached a predetermined level (reorder point =". The drum refers to the bottlenec' that maintains the production rhythm (alignment of all other activities to the bottlenec' activity". *igure 0 illustrates a generic process using a -uffer# =ope# ;rum system. *igure 0
product 3tart Activity 1 Activity 0 )old area (A&2" Activity 5 The Bottleneck Activity 4

Fa'e G

Ies

&f quantity in hold area H min = Eo

&nformation on the current quantity in hold area /nd

Customer

Modeling A Si !li"ied #rocess$ %ueuing &heor'

Gueuing Theory is the body of 'nowledge that analyzes waiting lines (a queue". Ae all have been in lines# at the supermar'et# ;isney# or at the doctor?s office. (ther type of lines include phone calls made to a reservation center# requests for an internet page to a server# a bro'en elevator in a building waiting for the technician. &n all cases there are entities that require a service (entities" and a service provider (server".

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Gueuing Theory answers questions related to the size of the line# the number in line# and the probability that a certain number of entities are in the line. Ahy is this usefulJ &t helps organizations recognize customer service costs# space requirements# and how service options compare. This section presents three basic models out of a large number (not within the scope of this course" of GT models. The tradeoffs of Queuing Theory GT allows the analysis of process capacity by determining the characteristics of the waiting line that will form before the process. The analysis of a service system is based on the cost of service (cost of providing the service" and the costs associated with customers (or entities" waiting in line@ cost of waiting. Ahile the costs of providing a service are relatively easy to compute# the cost of waiting are not easily determined. Aaiting costs are related to lost customers# customers that will not return# and customers lost due to word of mouth. The longer the line (and time waiting for service" the higher the waiting costs. *igure 5 Tradeoff Costs
1600

"igh 1400
1200 1000 Cost 800 600 400 Cost of Service Cost of aiting Tota! Cost

#o$

200 0 1 #o$ 2 3 Capacity 4 5 "igh

The relationship between service and waiting costs is illustrated in *igure 5. As capacity increases# the cost of providing the service (given a constant set of customers" increases given additional staff# equipment# etc. (n the other hand as capacity increases# the cost of waiting decreases due to a smaller time waiting by customers. The ob9ective of capacity analysis using GT is to determine the capacity level (or capacity option" that results in the lowest total cost. Characteristics of a Queuing Syste% A queuing system is a process model that has been condensed to a single activity. This single activity assumption is valid in many cases as it typically reflects the initial point of service or the tas' in the process that is the bottleneck.

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*igure 4. -asic GT process model

/ntity Arrives Aaiting area 3erver /ntity ;eparts

As *igure 4 shows# a queuing system is made from four components@ /ntity arrivals# a Aaiting <ine# a 3erver(s" (activity"# and a ;eparture area. /ach of these four components will be further described ne.t. Entity Arrivals This component is based on these assumptions@ 1. The arrival of customers is modeled by a 2oisson distribution with parameter (lambda". This parameter# called the arrival rate# is the mean (and variance" of the rate of arrivals. The arrival is always a rate# for e.ample 1 per hour (1 ,hr"# 16 per minute (16,min"# etc. -y using a 2oisson distribution# we can account for actual variability in the interarrival time. *or e.ample# about 1 consumers enter a burger restaurant per hour from 0+12F. This means that# every 56 seconds a customer wal's in. )owever# in reality arrivals are random# one customer may enter 1 seconds after the previous# then no customer may wal' in for 1 minute followed by three quic' arrivals and so on. 2oisson arrivals is a good representation of real life arrivals in service systems. The arrival rate could be directly lin'ed to forecasts for customer demand. 0. There is an infinite population of customers. The system will not run out of customers (an average of will always arrive into the system. 5. /ach arrival is by a single entity. Waiting Line This component is based on these assumptions@ 1. Customers are organized by *C*3 (*irst Come *irst 3erved". 0. (nce a customer enters the line# it will not leave the system at any time (regardless of line size or waiting time". 5. The line has infinite space. 4. There is a single line (li'e in a ban'" even when there are multiple servers. Server This component is based on these assumptions@ 1. (ne entity is serviced by server at a particular instance. 0. (ne or more servers can wor' in parallel (li'e tellers in a ban'". *igure 4 shows a process with two servers. 5. 3ervice time is based on a rate (mu" similar to the arrival rate. This rate represents the number of entities that can be processed by the server in a specific amount of time (its capacity". *or e.ample 10 per hour (1 ,hr" 4 service time of 1 minutes# 6 per minute (16,min" 4 service time of 1 minute# etc. 4. The service time is either constant or variable. The constant service time case represents processes with little or no variability in the time required# for e.ample

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automated machine processes or the process of selling tic'ets on a both. Kariable service times are based on an /.ponential distribution with parameter (mu". This represents cases where the service time may ta'e 1 minutes in some cases# 4.5 in another# 7.5 the ne.t and so on. Departure This component is based on this assumption@ 1. (nce the service is completed entities leave the system. Eo additional processes are required. *igure 1 A GT process with two servers.

3erver /ntity Arrives Aaiting area 3erver /ntity ;eparts

As mentioned# the ob9ective of GT modeling is to understand the behavior of the line in order to determine the capacity option that results in the lowest total cost. To determine this we need two cost measures@ the cost of each capacity option (cost of service" and the cost of waiting. Total Cost 4 Cost of 3ervice L Cost of Aaiting Cost of waiting (per day) 4 Eumber of visitors that visit the facility per day M average time each visitor waits M cost of waiting per time unit The cost of service is often based on the cost of servers or equipment# while the cost of waiting is based on lost sales per time unit of customer wait. &n cases where the cost of waiting cannot be established# for e.ample what is the cost of waiting for an ambulance# a tradeoff between time and cost is the basis for the analysis. The e.ample section will demonstrate such a case. The performance of a waiting line system is based on four measures@ Wq 4 Average time an entity waits in the <ine (Gueue" Ws 4 Average time an entity spends in the complete system ( Wq L /.pected Time in the 3erver" Lq 4 Average length of the line (number of entities on the queue" Ls 4 Average total number in the system ( Lq L /.pected number in the 3erver" ;etermining these measures of performance depends on the characteristics of the process being analyzed and driven by the arrival rate ( " and the service rate (".

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Model 1: Constant Service Processes and Single Server Wq 0( + " Ws Wq + 1 Lq Wq Lq L Ls

Model 2: Exponential Service Processes and Single Server Wq ( + " Ws Wq + 1 Lq Wq Lq L Ls

Model : Exponential Service Processes and Multiple Servers Wq Ws Lq Ls

Lq Wq + 1 CCM Lq L CCM 4 Comple. Calculations. Aill use a spreadsheet to solve.

/.ample The visitor center at the Nennedy 3pace center is facing increased attendance and lines. (ne of the predicted problem areas is the bus system that ta'es visitors to the launch area and to the 3aturn K comple.. The bus system can handle about 10 customers per hour with e.ponential service times. A visitor arrives to the bus area about every 7 seconds also e.ponentially distributed. The initial questions are@ what is the average time in line to ta'e the bus and what is the average size of the lineJ *irst# we must determine what are and . Ahile is given# 10 visitors ,hr# must be calculated by 4 1 visitor , 7 seconds (56 sec, 1 hour" 4 114.5 visitors,hr which is a rate.

3econd# is the selection of the model to use. Biven both the arrival rate and the service rate are e.ponentially distributed# model 0 is the correct choice. Eow we can calculate the average waiting time and visitors in the line. Wq 4 114.5 , (10 (10 + 114.5"" 4 .175 hours Lq 4 114.5 M .175 hours 4 DC visitors Ahile the line is quite long on the average# the average time in the line is small (the line moves fast as the average time waiting is 1 .4 minutes".

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The center estimates a per hour cost (operations and investment paybac'" for this entry system at O54 . The center also estimates that for each minute a visitor waits in line# the center losses O .5 in future sales and visits. The ne.t question is then# what are the total costs of this system. TC 4 cost of service L cost of waiting 4 O54 ,hr L J Cost of waiting per customer is 4 .175 hours M (O .5 ,min M 6 hrs,min" 4 O5.11 2er hour the center has@ 114.5 visitors and each costs O5.11 thus the cost of waiting per hour is@ O5.11 M 114.5 4 O16 0.0,hr. TC 4 O54 L O16 5.0 4 O1C45.0,hr The center is considering opening an additional bus entry point on the bus system station. This additional entrance will have a service rate of 0C customers per hour for each entry and an operational cost (total for both" of O1 ,hr. and costs. >sing the spreadsheet (for model 5"# we get a Wq and Lq of . 106D and 6.10 respectively. The total cost for this option is@ Cost of waiting per customer is 4 . 106D hours M (O .5 ,min M 6 hrs,min" 4 O .0C and the total cost per hour 4 114.5 M O .0C 4 O117.4 TC 4 O1 L O117.4 4 O1117.4,hr.

Biven the total cost is lower for option 0# the center should pursue the new design for the system.

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Acti(ities 1. ;escribe process bottlenec's that you have encountered in ban's# airports# or even (hope is not often" the university. Ahy do you thin' they form at this pointJ Ahat is the constraintJ 0. =ecommend ways to improve the situations described in activity 1. 5. 3elect a service operation during a pea' time+ a cafeteria or ban' during lunch# the gym at 62F# or the movies at D2F. a" Trac' the inter+arrival time of people at this location. Fa'e at least 1 measurements. b" 2lot the times and calculate the average. c" Trac' the service time of the process. Fa'e at least 1 measurements. d" 2lot the times and calculate the average. e" ;escribe the behavior of the line during your observations. )*ercises 1. ;etermine all the waiting line measures for the following systems. Calculate all time measures in hours. a" Arrival rate 4 1,min# 3ervice =ate 4 6,min# Constant service# 1 server b" Arrival rate 4 5 ,hr# 3ervice =ate 4 1D ,hr# /.ponential service# 0 servers c" Time between arrivals 4 10 seconds# 3ervice time 4 1 seconds# /.ponential service# 1 server 0. The managers of an amusement par' want to determine what system will result in the smallest average line for a new food selling both (e.perience tells them that small lines ma'e people want to 9oin the line". A human operated 'ios' can serve C customers per hour e.ponentially distributed and about D customers per hour want to buy something from those items sold in the booth. An advanced automated selling machine can serve D customers and about 71 per hour want something sold in the machine. Ahat is the best choiceJ 5. An order+ta'ing center receives about 0D1 orders per hour (2oisson" and can serve 5 orders per hour e.ponentially distributed (as a single server". The order+ta'ing center is considering splitting the center into two locations. /ach will then handle 11 orders per hour. The cost of the current system is O1 per hour and O101 if split. *or each hour an order waits it costs the company O1 in future sales. 3hould they split the operationJ

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4. A new people+moving system is being designed for the Tampa /.po 0 4. Three designs for the stationsP entry system are being considered. .

(ption 1# there will be two separate entrances (1 P feet between each"# thus each will have with its own line. About 1 visitors will arrive per hour for each line# and the service rate for each entrance will be 61 per hour (e.ponential". The service cost of this facility is O1 N per year year.

(ption 0 will have two entrances ne.t to each other# feeding from a single line. /ach will have a service rate of 6 visitors per hour (e.ponential". Arrivals at this single entrance will be about 1# per hour. The service cost of this facility is O7 N per year.

(ption 5 is to have a single entrance using an automated system that can process 1#1 per hour at a constant service rate. Arrivals at this single entrance will be about 1# per hour. The service cost of this facility is OD N per year.

The Tampa+/.po will be open for 04 days and 0 hours per day. *ind the option that minimizes total cost per year. The cost of lost goodwill is O01,hr of waiting time.

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